Note 8 - Income Taxes

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Income Tax Disclosure [Text Block]

8 . Income Taxes

Our effective income tax rate was

26.0%

for the

three

months ended

June 30, 2018,

compared to

37.4%

for the

three

months ended

June 30, 2017.

Our effective income tax rate was

26.0%

for the

first

six

months of

2018,

compared to

32.9%

in

2017.

In determining our quarterly provision for income taxes, we use an estimated annual effective tax rate, adjusted for discrete items. This rate is based on our expected annual income, statutory tax rates, best estimate of nontaxable and nondeductible items of income and expense, and the ultimate outcome of tax audits.

The Tax Cuts and Jobs Act (the Act) was enacted in

December 2017.

Beginning in

2018,

the Act reduced the U.S. federal corporate tax rate from

35%

to

21%.

We are applying the guidance in the Securities and Exchange Commission Staff Accounting Bulletin (SAB)

No.

118

when accounting for the enactment-date effects of the Act. At

June 30, 2018,

we have

not

yet completed our accounting for all of the tax effects of the Act. However, we have made a reasonable estimate of the effects on our existing deferred tax assets and liabilities. We will continue to make and refine our calculations as additional analysis is completed. Our estimates

may

also be affected as we gain a more thorough understanding of the tax law. Our effective income tax rate for the

first

six

months of

2017

included the effect of a

one

-time after-tax benefit of

$13.6

million for the claiming of federal research and development tax credits and domestic production tax deductions for the

2012

through

2016

tax years.

At

June 30, 2018,

we had a total of

$46.9

million in gross unrecognized tax benefits, which are a component of other long-term liabilities on our Condensed Consolidated Balance Sheets. Of this amount,

$37.1

million represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate. The total amount of accrued interest and penalties for such unrecognized tax benefits was

$4.7

million at

June 30, 2018.